CHICAGO - A money manager testified Monday that he arranged a $50 million deal involving the state teachers pension fund and agreed to split the finder's fee he received with Gov. Rod Blagojevich's father-in-law.

But money manager Sheldon Pekin told the jury at political fundraiser Antoin "Tony" Rezko's fraud trial that the governor's father-in-law, Chicago Alderman Richard Mell, never got the money.

The order to split the fee with Mell came from millionaire attorney Stuart Levine, Rezko's alleged partner in a massive fraud scheme, Pekin testified.

Pekin said Levine told him in 2003 that Mell was unhappy because his daughter's husband had been elected gover-nor but he wasn't getting any benefit from it.

"He was upset because he wasn't participating in the spoils," Pekin quoted Levine as saying of Mell.

In the end, the money was paid to a Glenview businessman instead, Pekin testified.

Mell said he had no part in any scheme to split a finder's fee.

"One, I have never met, nor would I recognize, Mr. Pekin if he walked into the room," Mell said in a telephone in-terview. "Two, the only time I met Stuart Levine was in 2001 when I was raising some money for my son-in-law who was running for governor and I met him in a friend's office. He happened to be there."

Mell scoffed at the notion that he had been upset about not getting his share of the spoils once Blagojevich won the election.

"I don't know what spoils are," the veteran Chicago ward committeeman said. "I don't know what he's talking about. It makes no sense at all."

Rezko, 52, a major fundraiser for Blagojevich and Sen. Barack Obama, is charged with scheming with Levine to pressure kickbacks out of firms that wanted to invest money from the State Teachers Retirement System.

Neither Obama nor Blagojevich have been accused of any wrongdoing.

The teachers retirement system is a $30 billion fund that pays the pensions of retired downstate and suburban school teachers.

Rezko is also charged with scheming with Levine to split a $1 million bribe that was to be paid in exchange for giv-ing a hospital company approval to build an $81 million branch in Crystal Lake in McHenry County.

Levine was a member of the board with power over hospital expansion programs in the state and another board that decided which money management firms would be allowed to invest teachers pension fund assets.

Rezko says he was not involved in any such schemes.

Pekin testified that he served as a "finder" for a private equity company, Glencoe Capital. As a finder, it was his job to get Glencoe a share of the big teachers pension fund to invest.

Pekin said he initially believed he would get a finder's fee of $750,000. He said he drew up a blank consulting con-tract to show that whoever ended up splitting the fee with him was actually a consultant.

The amount of the finder's fee was reduced from $750,000 to $375,000 because the investment was arranged in such a way that it would not be as lucrative for Glencoe Capital as initially expected, Pekin said.

Levine was unhappy when told the amount was half what was anticipated, Pekin said.

"He was very upset by it," Pekin said. He said he had originally expected to pocket half of the finder's fee but agreed to take a third and pass along the remainder.

Pekin is now retired. He entered the courtroom in a wheelchair, testified that he suffers from Parkinson's disease and at times had difficulty making himself understood. He testified under a grant of immunity from prosecution for anything he might say on the witness stand.